Transfer of Annuity from Husband to Wife

Husband has an annuity which would have taxable income if the annuity was distributed .
Can the Husband transfer as a gift the annuity to the wife and not trigger a taxable event ?
I would think that a transfer of an annuity as a gift would trigger taxable income to the Husband.

Are you implying that Section 1041 doesn't apply to this transfer, or are you asking us whether that section applies to transfer of an annuity?

Here's the essence of Section 1041: No taxable gain or loss will be recognized on the transfer of property from an individual to his or her spouse.

No, you're fine. See section 1041. And this is one of several similar statements in rulings by IRS:

Section 1041 was added to the Code by § 421 of the Tax Reform Act of 1984 (1984 Act), Pub. L. No. 98-369. The House Report accompanying the 1984 Act expresses the intent of Congress behind section 1041:

The bill provides that the transfer of property to a spouse incident to a divorce will be treated, for income tax purposes, in the same manner as a gift. Gain (including recapture income) or loss will not be recognized to the transferor, and the transferee will receive the property at the transferors basis . . . .Thus, uniform Federal income tax consequences will apply to these transfers notwithstanding that the property may be subject to differing state property laws.

H. R. Rep. No. 432, 98th Cong., 2d Sess., Part 2, at 1491-92 (1984) ("House Report").

Concerning transfers between spouses of annuities and beneficial interests in trusts, the above legislative history specifically states that where an annuity is transferred, or a beneficial interest in a trust is transferred or created, incident to divorce or separation, the transferee will be entitled to the usual annuity treatment, including recovery of the transferors investment in the contract (under sec. 72), or the usual treatment as the beneficiary of a trust (by reason of sec. 682). . . . Id .

For purposes of subtitle A, § 1041(a) provides a broad rule of nonrecognition of gain or loss for any transfer of property between present spouses and between divorcing spouses if the transfer is incident to divorce. In our view, a broad application of § 1041 is consistent with the language of the statute and the above statement of Congressional intent.